Basic Financial Caregiving

Caregiving involves more than just medical problems. Helping your loved one manage his or her finances can ensure that he or she will be able to pay for needed care and live more comfortably.


Financial caregiving typically involves:



  • Bill paying
  • Deposits
  • Insurance and benefit claims
  • Savings and investment decisions
  • Tax preparation
  • Other financial duties

The job is especially tough if a caregiver lives far away or has other demands on his or her time. And the stakes can be high: Bad investment decisions can reduce a loved one’s assets or standard of living, which can lead to disputes with other family members, which can in turn lead to estrangement or even lawsuits.


Here is a roundup of financial tips, information, and resources that can help if you are called upon to care for an ill or disabled loved one.


Financial Planning Before a Crisis

Consider taking these steps before a loved one becomes ill or disabled. (Many of these suggestions also make sense for young and healthy people to get their own finances in order.)


Encourage Saving, Investing And Prudent Spending.

If your loved one doesn’t already have financial goals and working relationships with professionals he or she trusts (bankers, accountants, financial planners, and so on), urge him or her to start. These relationships may prove especially beneficial in a crisis.


Make Sure The Family Knows Where To Find Important Documents.

These include bank and brokerage statements, wills, insurance policies, and pension records. Make sure your loved one understands that you don’t want to pry into personal financial information; your main concern is that you know what documents to look for and where to find them in an emergency. By having this knowledge, you can protect your loved one’s assets, including dividends, interest, insurance, pensions, Social Security payments, rental income, and the contents of safe deposit boxes.


Obtain Access To Bank And Brokerage Accounts In An Emergency.

To write checks or withdraw funds, you or someone else your loved one trusts should become a joint owner of a bank account or simply make arrangements through the bank to be authorized to conduct transactions. Also, to ensure access to a safe deposit box in a crisis, your loved one can appoint a “deputy” or “agent.” Because of the possible pitfalls or complications of giving someone else access to an account, you should first seek advice from a banker, attorney, or other qualified professional.


Consider Automatic Payment Of Important, Recurring Bills.

You can arrange for water, electric, health insurance, mortgage, and other regular commitments to be paid electronically out of your loved one’s checking account. This makes bill paying easier and prevents hassles and interruptions in service if required payments aren’t made. You also may be able to arrange to be notified if your loved one misses a payment.


Consider The Direct Deposit Of Pay And Benefit Checks.

Most experts believe direct deposit is safer and more convenient than paper checks. There are no delays in getting funds deposited, no checks are lost in the mail or forgotten at home, and notices about each payment and deposit can be obtained.


Also be aware that a 1996 law, with certain exceptions, requires that federal wage and retirement payments be sent electronically. So before ruling out direct deposit, consider talking to the Social Security Administration, bankers, and others involved in the process to try to clear up problems or misconceptions.


Get An Accurate Assessment Of Your Loved One’s Financial Situation.


This is especially important if your loved one is secretive about his or her finances. Oftentimes, adult children simply assume that their aging parents are financially secure. It isn’t until a crisis occurs—such as electricity being turned off—that they discover the truth.


Older people also are often the target of fraud. Con artists know that ill or elderly people tend to be lonely and willing to trust strangers who call them—ideal candidates for telemarketing fraud, bogus home repairs, get-rich-quick schemes, and other cons. If your loved one is secretive about financial transactions, you may want to take steps to find out where his or her money is going. Phony stock deals or telemarketing scams can drain even a substantial bank account in a hurry. If you discover a problem, the National Fraud Information Center (NFIC) says, “Don’t be critical. Don’t embarrass or humiliate the victim. Don’t get angry.” Instead, calmly explain that the friendly person supposedly offering great deals may indeed be a crook.
 
Financial Planning After A Crisis

The following should be on any family’s checklist if a relative becomes ill or disabled.


Get Solid Financial And Legal Advice.

Contact bankers, lawyers, accountants, insurance agents, or financial planners that you or your loved one has dealt with in the past. Ask for their advice, and find out how they can assist. Also consider working with professionals who specialize in helping the ill or elderly.



  • Elder law attorneys regularly handle estate planning, Medicare and Medicaid issues, insurance disputes, fraud cases, and other legal affairs affecting the elderly.
  • Daily money managers are professionals who pay bills, balance checkbooks, monitor insurance claims, and handle daily financial responsibilities for other people.
  • Geriatric care managers are trained to help, or find help, with various tasks, including money management and evaluating housing options.

Work only with professionals you believe are reputable and ethical. If friends or relatives can’t give you a referral, talk to your loved one’s doctor or a social worker at a hospital or nursing home.


Take Advantage Of Free Or Low-Cost Assistance Programs.

Many lawyers, financial advisors, and other professionals offer free initial consultations. But for ongoing assistance at little or no cost, consider the services available from private organizations and government agencies, including:



  • Financial counseling that employers make available to workers and their families
  • Social service agencies sponsored by state or county government agencies
  • Private organizations, including those affiliated with certain religious groups but available to people of any faith
  • The local or national offices of disease-specific organizations (such as the American Cancer Society or the Alzheimer’s Association); and other membership groups.

Respect Your Loved One’s Opinions And Desire For Autonomy.

“Caregivers mean well but often, out of their own anxiety and guilt, become overly protective and begin making decisions that the relative is fully capable of,” says Gail Hunt, executive director of the National Alliance for Caregiving, a Washington-based organization for families caring for older Americans.


“The care recipient, even if physically frail, should always be making his or her own financial decisions,” Hunt says, adding that important decisions should be in consultation with other family members, if appropriate. “The caregiver may have to step in if confusion, dementia or mental illness becomes an issue.”


Share Financial Decisions With The Family.

The person you’re caring for always should be given as much control and involvement in financial decisions as possible. And if you must assume full responsibility for a loved one’s finances, you should share information with other family members—to avoid the possibility of later recriminations. You might even consider family meetings to discuss finances, just to keep everyone current on spending and income. It’s generally also wise to keep good notes about significant discussions you have with family members and the actions taken as a result.


Think About Sharing Duties With Family And Friends.

It’s probably most efficient for one person to perform regular responsibilities, such as paying bills or making deposits. But don’t be shy about asking family, neighbors, and friends to help out where appropriate. Some may be able to handle occasional banking matters and other basic errands. Those with legal, health-care, or financial training can be particularly helpful with certain tasks. If help is available on a regular basis, that’s even better. You’ll need a break periodically.


Be Aware Of Your Potential Liability.

A caregiver may become a joint owner of a checking or savings account, serve as a legal representative (through a power of attorney), or become someone’s trustee or guardian. Any time you agree to share responsibility with or for someone else you may be taking on unexpected risks. Before you sign any legal documents, have your lawyer check them over and explain any potential liabilities.


Here’s another pitfall worth considering: If a relative adds your name to a joint account at a bank where you already have deposits, this could put some of your money over the $100,000 federal insurance limit. Under the FDIC’s insurance rules, your share in all joint accounts at that institution would not be insured for more than $100,000.


Be Prepared For Out-Of-Pocket Expenses.


Caregivers don’t get paid and frequently don’t get reimbursed for long-distance phone calls, travel, groceries, medications, personal care items, or other purchases—not to mention “hidden” costs, such as taking unpaid leave from work. Of course, as a caregiver your main concern is to ensure your loved one’s well-being. Even so, the costs of caregiving can be substantial.


Be Smart About Borrowing Money.


Your loved one might need extra help to pay for medical or other expenses. In some cases, it might make sense to use a credit card or go to a financial institution for a loan. Seniors who own a home may be able to borrow against the built-up equity, using a second mortgage, home equity loan, or reverse mortgage. Some banks also have special loan programs for the disabled, such as loans to buy specially equipped vans or to make homes and businesses more accessible. Before agreeing to any loan, make sure the debt is manageable, and thoroughly research and discuss the pros and cons. Also remember that under the Equal Credit Opportunity Act, a creditor cannot deny or terminate a loan because of someone’s age or disability.


© Copyright FamilyCare America, Inc. All Rights Reserved.


Adapted from “Financial Caregiving: A Survival Guide.” FDIC Consumer News, developed by the Federal Deposit Insurance Corporation.

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